If it remains a safe investment, rental investment is subject to new constraints. They might discourage some.
The health crisis has not prevented real estate purchases. Low rates are no strangers to the record recorded by the Century 21 real estate agency network in terms of rental investment. As reported The echoes, the share of purchases of real estate intended to be rented fell from 17.4% in 2014 to 30.2% of transactions carried out by the network. In 2021 alone, the increase reached 2.7% in 2021. And in Paris, rental investment represented 32.5% of sales. However, measures could slow down or even block certain investors.
This is particularly the case with the new credit standards imposed by the High Council for Financial Stability (HCSF). Recommended before becoming compulsory on January 1, they set the maximum duration of the loan at 25 years and the debt at 35% of income, including borrower’s insurance. The daily explains that credit specialists are observing a decline in the financing of loan applications made by investors. Artémis brokerage estimates that the share of mortgage applications for the purchase of a rental property fell from nearly 20% in 2019 to 11.21% in 2020. Last year, the broker noted a new decline (11.15%).
Rent control
What’s more, lending institutions can no longer use the differential debt calculation method, which made it possible to take into account future rents. These were previously deducted from the monthly loan payment. From now on, they are considered income. Also, the 35% debt limit is quickly reached if, for example, an investor repays a loan contracted to finance the purchase of his principal residence. If the banks have a leeway of 20% of their loan production, first-time buyers with small means and certain investors are penalized.
The adoption by more and more municipalities of rent control can also be a brake on rental investment. First adopted by Paris, then Lille, it was extended in 2021 to new municipalities in Seine-Saint-Denis, Lyon and Villeurbanne. Bordeaux and Montpellier should also apply it this year. If it aims to avoid abuse, professionals believe that it can discourage some to start renting. Added to this are those who rent from hand to hand, without respecting the rent control. Soon, a decree should require real estate professionals to include the ceiling rent in each ad. An evolution which was then to be extended to those disseminated by private donors, recalls The echoes.
The new ECD
The desire to prohibit the rental of thermal sieves (labeled F, G or E in energy performance diagnostics) is also discouraging. The change in the method of calculating the DPE means that more goods are now considered to be poorly insulated. Given the cost of energy renovation, despite the existence of aid, some investors could give up. This raises fears of a housing shortage. The coercive system is however accompanied by public aid for renovation and a relaxation of the timetable has already been mentioned.
Finally, the municipalities that are taking measures against short-term furnished tourist rentals are multiplying. Paris, for example, beefed up its system last December. Thus, the transformation of shops into furnished tourist accommodation will have to be authorized. And those who wish to rent their second home will have to submit to compensation.